What is
Reverse Mortgage Loan?
Reverse Mortgage Loan (RML) enables a Senior
Citizen above 60 years age in India.
The idea is to avail of periodical payments/
lump sum amount from a lender against
the mortgage of his/her house. Such a loan
allows the borrower to continue to occupy
his house as long as he lives. Unlike other
loans, reverse mortgage need not be repaid
by the borrower. The maximum period of the
loan (over which the payments can be
made to the reverse mortgage borrower) is 20
years. The lender on the other hand
has to value the property periodically at
least once in five years and the quantum of
loan may be revised based on such
re-valuation of property at the discretion of the
lender. On the borrower’s death or on the
borrower leaving the house property
permanently, the loan is repaid along with
accumulated interest, through sale of the
house property. The borrowers or their heirs
also have the option of prepaying the
loan at any time during the loan tenor or
later, without any prepayment levy. In the
usual mortgage, as the regular mortgage
payments are made the outstanding loan
decreases and the house equity increases.
Reverse is the case in reverse mortgage,
the loan amount increases with time and the
home equity decreases with time.
